Alienating Your Best Employees

Fasten your seat belts. The slumping economy has now officially worked its way into the job market.

The latest government report on jobless claims showed that 375,000 people filed new claims during the week ending Jan. 26, up from 300,000 two weeks earlier. Those are 75,000 reasons, in one week, for fear and anxiety to grip the workplace. This uptick in jobless claims and the barrage of layoff announcements creates an atmosphere of anxiety and fear--and that is when managers lose their cool; their respect for co-workers, associates and superiors; and their perspective.

Even in strong economic times, the workplace can be, and usually is, a pressure-cooker. Once layoffs hit, every office in every company has the potential to descend into a cover-your-ass, blame-the-other-person hell. The pressure cooker creates a foundation of fear. And as budgets tighten and stress levels rise, U.S. managers working from fear, often (inadvertently) create ill will among employees and an even adversarial relationship with those whom they rely on the most. The effects don't just hit employees once--they linger, lasting beyond the temporary business slowdown, and generating a corporate reputation, which is difficult to overcome.

Clearly, many companies are changing internally due to the economic slowdown. In addition, there will be shifts in jobs from slowing industries to growth industries (such as renewable energy), and people will need to respond and re-engineer their lives and careers accordingly. Changes in attitude and commitment in the talent pool will create further change in the workplace. And while these changes play out, public company managers need to see this as an opportunity to help evolve their companies. Unfortunately, most managers simply revert to the easiest economic quick fix of layoffs to show that they are doing "something."

The first order of business is for managers and boards to admit when they have made strategic mistakes. Did they pursue a dead market or develop an unwanted product? Did they plan properly for the market we are now facing? Did they over-fund one area of the enterprise while starving another?

The reality is that many, but not all companies, are feeling the pinch because of poor management decisions made during good economic times. The company was not strategically guided to markets that held promise for the future. So, leaders who can admit mistakes will put their organizations on the road to recovery--as well as humanize the organization they lead. But, admitting error is a rarity, while blaming uncontrollable forces is not.

Doing so ultimately drives a company to produce a weaker workforce in the end. Think of the companies that have lost their edge--the American auto companies. Then think of companies that re-invented themselves, like
IBM
and
Apple
(which recently dropped "computer" from its legal name). Now think about
Google
, which despite its success, knows it is pushing for its next life. That is why it bought YouTube and is pressing ahead.

If we think back to the dot-com bust in 2000, mid-level managers were laid off as companies tried to maintain profits or lessen losses. Many of those organizations no longer exist. No talent, no company.

Tight budgets and scary economic forecasts create a pitched platform at work, especially among overworked top managers and abandoned associates. Oftentimes, the wrong people are laid off, and top performing associates, the ones most essential to keep, will always drift away to more stable environments where their talents are acknowledged and appreciated, and their hands are not tied.

Eventually, companies who strangle and handcuff their employees lose valuable workers and will lose market share; they will be left unprepared when the economy recovers, which it inevitably will. In reality, the abusive or neglectful boss will only be left with people who will take the abuse, and all too often these are underperformers who have little choice in the job marketplace. So, incompetent managers actually weaken the organization for the next economic cycle, while, of course, diminishing their own value and credibility. So, if you are like most managers, complaining about your distressed workload and a life out of balance, ask yourself how many great employees you helped to (unnecessarily) exit the business.

So, these tough economic times truly challenge top management's mettle and force you to ask if you are a courageous leader or a mindless manager. The leaders that are open, honest, compassionate and creative will end up with a stronger workforce coming out of a recession--and the good times will return. These leaders focus even more on being responsible, empowering, accountable and loving, especially during the tough times.

Leaders will also use this time to take a chance. It is a time for the smart companies to snap up the smartest people. It is a time to gain market share through a company's best asset--its people. You cannot shrink your way to greatness.

As we approach another possible recession, here's what smart, progressive leaders should do:

First, be open and honest. Explain the real problems to staff, and ask for their input on how best to respond. This creates trust, and shows respect for the talents of those on whom you depend. Furthermore, your team members may actually produce better, more powerful solutions than managers--and oftentimes do.

Second, genuinely help those laid off. If people must be fired off, find a way to help them move on in their career--in an authentically supportive and empathic way. Lip service won't do here, and the way you treat those who are leaving sends a powerful message to those who are staying.

Meanwhile, do a real self-evaluation. In the face of layoffs, ask really difficult questions. If changes happen at the company, should they only happen at the middle management and lower ranks? Is the company being reorganized for a new structured economy? If so, what managers are needed for a stronger company?

Finally, look around for companies that let their best people go--and snap them up. It will pay huge dividends as the economy strengthens.

Dr. Ken Siegel, a global managerial psychologist, is president of The Impact Group, a group of psychologists who consult for managers and leading global companies.